Client MandateIn September 2008, Lehman Brothers Holdings Inc. (“Lehman”) filed for bankruptcy with limited pre-planning. A&M assumed management of the Lehman estate and its assets, including a global real estate portfolio with a marked-to-market value of $23 billion. The real estate portfolio consisted of senior and mezzanine loans, joint venture equity and real estate-owned (REO), unsecured corporate loans and a significant number of in-process development assets across all property types. Due to financial stresses leading up to bankruptcy, Lehman had encumbered much of its real estate portfolio through repurchase agreements and pledges. Complicating matters, Lehman had engaged in a sale of virtually all of its personnel and systems to Barclays at bankruptcy.

A&M’s ApproachA&M’s overall charge was to maximize recoveries for creditors by implementing an orderly approach to winding down assets, thus minimizing exposure to distressed sale pricing. In order to accomplish the mandate, A&M performed the following major activities:

Untangle the Lehman Portfolio: A&M aggressively worked to untangle pledges and put projects’ capital stacks back together and to gain full control over Lehman Portfolio decisions; within three years, all significant entanglements were resolved.

Appropriately value the portfolio: A&M wrote down the real estate portfolio to $7 billion in the aftermath of Lehman’s bankruptcy, appropriately accounting for broken capital structures and impaired debt or equity as market pricing adjusted to a new equilibrium.

Execute asset-level business plans: Collaborating with former Lehman employees with institutional, portfolio and asset level knowledge, A&M evaluated and established a business plan for every asset in the Lehman Portfolio; many of these business plans involved, appropriately restructuring and stabilizing assets and positioning them for monetization.

ResultsLehman is the largest bankruptcy in the history of the U.S., and challenged our financial markets, regulators, judicial system, court appointed management and other stakeholders to preserve order through a lengthy liquidation process. A&M’s Real Estate Advisory professionals successfully maximized recoveries for creditors by developing and administering an expedient liquidation process.

Defined Structure for Reviewing, Approving and Executing Exit Strategies: The asset business plans are reviewed and revised every six months to ensure current market factors and performance are taken into account; over the course of the case, A&M successfully oversaw approximately 500 asset restructurings and the resolution of over 300 deals.

Ongoing Oversight of the Broker Network to Maximize Recoveries: With more than 850 positions representing 500+ deals, the Lehman Portfolio requires active monitoring, especially during the wind down/sale process; under A&M management, approximately 25 to 50 deals were listed at any given time with various brokers.

Active Market Monitoring to Capitalize on Sales Opportunities: The real estate portfolio has generated over $6 billion in receipts since bankruptcy (through December, 2011), with the expectation of an additional $14 billion through the end of 2015.